Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Financial Accounting Expert

problem 1

Rod Xiong, is the owner and Chief Executive Officer (CEO) of GFF Telecommunications Services Inc. (GFF), a private Canadian company that wholesales cellular phones. One of the defining characteristics of this industry is that it is extremely competitive given the oligopolistic nature of the wireless industry, where major service provider’s players such as FIDO and Rogers have significant buying power. One of the keys to GFF's success is that they provide exceptional service and have a loyal client base.

Arsineh Tackas, MBA, was hired as the Chief Financial Officer (CFO) of GFF in 2012. One of the reasons that Arsineh was hired was that she was very knowledgeable about IFRS and GFF wanted to prepare its financial statements. The CEO's stated reason for electing to adopt Part I was his desire to take the company public in 2013.

As CFO, Arsineh is responsible for co-signing the management letter of representation provided to the firm's auditors and as such is presently overseeing the preparation of the GFF’s 2012 financial statements. In so doing she notes that Selina Tang, the Financial Controller has included revenue from a number of transactions commonly referred to as "bill and hold,” which is a transaction where the seller bills the customer but holds the goods for shipment at a later date.

Arsineh believes that these sales may be cancelled any time prior to delivery without penalty and as such the sales should not be recorded until title to the goods has transferred.

When Arsineh asks Selina about this matter, she replied that "Rod told me to book these sales in 2012. He pointed out that the orders are seldom cancelled and that this contention was born out by the fact that the goods were all delivered in January 2013." Troubled, Arsineh thanks Selina for her time and then goes to speak to Rod about the matter. Rod invites Arsineh into his office and then closes the door behind her. When asked about his instructions to Selina, Rod replies:

“Arsineh, you and I know the game that we have to play with the big boys. They order the goods and pay for them, but we hold them in our warehouse and insure them. When they have room in their stores they take delivery. While technically they can cancel the order without penalty at any time before shipment, they seldom ever do. I believe that given our strong relationship with our client and the historical record of completed sales on bill and hold transaction that recognizing revenue in 2012 is warranted. You know that the company's shares are soon going to be offered for sale in the initial public offering. It goes without saying that recording these sales and profits in 2012 will look better to potential investors and help us achieve a better price for the shares than if we do not report them. I expect you to support me in this matter.”

Arsineh returns to her office and contemplates the recent chain of events.

Required:

Prepare the report and outline Arsineh Tackas’s professional obligations and recommend how she should proceed. Your answer should be between 800 and 1,200 words in length.

Financial Accounting, Accounting

  • Category:- Financial Accounting
  • Reference No.:- M91587

Have any Question? 


Related Questions in Financial Accounting

Territory account management calculating sales compensation

Territory Account Management Calculating Sales Compensation In problems 1 – 4, compute both the commission and the total pay based on the information given. 1. Salary, $3,000; commission rate, 6%, total sales, $58,000; r ...

Assignmentfor all questions assume no other transactions or

Assignment For all questions, assume no other transactions or activities have taken place during the period except as noted. Answer all questions! Prepare and present calculations for partial credits for questions with c ...

Assignmentthe assignment requires the use of the

Assignment The assignment requires the use of the Library/Internet research to locate and study written articles on any topics on financial accounting that was covered in the class. The student is required to critique, a ...

Assignment exxon versus chevronaccording to the textbook

Assignment: Exxon versus Chevron According to the textbook, the income statement measures the success of a company's operations for a given period. The income statement is important to investors and creditors, because it ...

Assignmentsqueezed by rising costs a confectioner struggles

Assignment Squeezed by Rising Costs, a Confectioner Struggles to Cope Telford James and his wife Ivey are the second-generation owners of James Confectioners, a family-owned manufacturer of premium chocolates that was st ...

Assignemnta explain the term bank reconciliation and state

Assignemnt (a) Explain the term "bank reconciliation" and state the reasons for its preparation. (b) Ssemakula, a sole trader received his bank statement for the month of June 2001. At that date the bank balance was Sh. ...

Financial accountingfinancial conditionbullfor this

Financial Accounting Financial Condition • For this discussion, assume the role of a financial manager in a company, and assume that you have just hired a new bookkeeper to join your team. You want to assess the new hire ...

Question 1the buck store is considering a project that will

Question 1 The Buck Store is considering a project that will require additional inventory of $216,000 and will increase accounts payable by $181,000. Accounts receivable are currently $525,000 and are expected to increas ...

Assignmentintroductionannual report analysis projectis

Assignment INTRODUCTION Annual Report Analysis Projectis designed to get you familiar with a real company's financial statements and disclosures. The purpose of the project is for student to be able to identify the discl ...

On january 1 2004 digital inc leased heavy machinery from

On January 1, 2004, Digital, Inc. leased heavy machinery from Young Leasing Company. The terms of the lease require annual payments of $20,000 for twenty years beginning on December 31, 2004. The interest rate on the lea ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro